Creating an E-Business Plan

Chapter 4

E-Business Plan Organization

Used to seek funding for a new or existing e-business

Serves as a “Blueprint” for operations after the business is founded

Develop a plan, taking time, effort, and thought– View is critical, objective, & unemotional

Sources of help for the e-entrepreneur 3 to 5 year outlook

Business Plan Help Sources

Small Business Administration (SBA) Service Corps of Retired Executives

(SCORE) Small Business Advancement National

Center (UC Arkansas) Commercial Sources, i.e., BizPlanit.com,

bplans.com

Small Business Administration

Startup Help

Elements of a Plan

Coversheet TOC Executive summary Description of idea Information about products or services

offered

Industry analysis, target market, & competition

Operating, marketing, financial and management plans

Identification of critical risks Exit strategy

Elements of a Plan (cont’d)

Cover Sheet and Title Page

Identifies the name of the business and author

May identify the addressee of proposal

Hints:– # each copy– Keep list of who has a copy– Clearly mark confidential & no coping allowed

Table of Contents Lists all sections and subsections by page

number. Must be well organized and accurate. Can come at the beginning or the end of the

process Common mistakes:

– Missing sections/sub-sections– Too much detail– Sloppy layout– Incorrect page numbering

Executive Summary An overall view of the entire plan May be used to screen plans by bankers and

investors Should highlight key points including the idea,

the competitive situation, the financials and the “players”

May be easier to write after the plan is complete

Similar to what other type of document you should be or will be familiar with?

Vision and Mission Statements

An overall statement of the business's goals and philosophy

Vision– Long-term dreams/goals– Should inspire, guide, & encourage people toward

achieving goals

Mission– Challenging but achievable actions to achieve the

vision

Vision and Mission Statements

Interchangeable with “goals”, “aims”, “philosophy” and “direction”

Should consider:– Define your purpose of the statement– Audience (customers, shareholders, staff,

competitors, government, press, & public)– Who benefits from the statement

Focus on themes (p. 122)

A Vision Statement

A Mission Statement

Business Description

Provides the reader with an outline of the e-business’s background and concept

P. 124

Products and Services

A description of each product or service you plan to offer

Level of detail is important Enough for the reader to understand and not

be confused Include high-quality pictures or graphics,

where appropriate Products vs. Services

Industry Analysis

An analysis of the business environment Focus on the basic industry segment

– What are some “industries”?

Info should be based on verifiable data and market research by:– Government agencies– Industry trade associations– Qualified studies from reliable organizations

Marketing Plan

Critical elements of the plan Target market description Demographic, geographic, and

psychographic characteristics of market Competitive analysis Objectives, tactics, and strategies Budget and timeframe

Marketing Objectives should be clearly stated, measurable, and lead to sales

Marketing Strategies describe the features of the products, services offered, and pricing strategies

– 4Ps – product, price, promotion, & place (distribution)

Marketing Budget is an estimate of the costs for all activities described in the marketing strategies portion of the plan

Marketing Plan (cont’d)

Marketing Plan Common Mistakes

Defining the target market too widely Not specifically identifying advertising and

promotion activities Omitting details about when, where, and how

to reach the target market and cost

Operations Plan

Description of the business:– Location, equipment needs– Labor needs– Manufacturing – Logistics – Integration of Internet services

GroceryWorks example – p. 131

Financial Plan

Shows the reader how all the ideas, concepts and strategies described elsewhere come together in a profitable (hopefully) way.

The plan should include pro forma:– Balance sheet– Income statement– Cash flow statement

Financial Plan Common Mistakes

Failing to include projections Presenting unrealistic sales and profit

projections Underestimating Failure to plan for unexpected costs

Management Plan

A strong management team is critical as many investors base their decision on this factor.

– Typically 3-5 people

The plan should list and describe the experience base and background of the key individuals who will be involved in the day-to-day operation of the firm.

Board of advisors – outside advisors The plan should detail those areas that will be

outsourced.– Typically accountants, attorneys, bankers, insurance agents,

and technology experts.

Issues, Analysis, and Critical Risks

Identifies threats or opportunities faced from outside influences.

These include economic outlook, innovations, environmental and governmental factors.

Exit Strategies

How will investors get their money back? Describe long term plans

– Public Offering (IPO)– Acquisition/merger– Sale to others

Discussion of these issues adds credibility

Legal Forms of Organization

There are three basic forms of legal organization for a firm

– Sole Proprietorship– Partnership– Corporation – “C”, “S”, and “LLC”

Complex legal and tax issues are involved; form chosen is highly contingent on individual circumstances. Seek counsel from attorney and accountant.

E-Business Partnerships Many e-businesses establish partnerships

with firms in their value chain. Potential partnerships should be detailed in

the business plan.– PartsAmerica.com– Toys ‘R’ Us